Climate finance and poverty: Exploring the linkages between climate change and poverty evident in the provision and distribution of international public climate finance

This report explores the international public climate finance flows from developed to developing countries and provides new, detailed breakdowns of international climate investments. It offers evidence on how well the recognised links between climate change and poverty are reflected in how international public climate finance is provided and distributed.

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Climate change is among the greatest global development challenges of the 21st century. From the global to the local scale, climate change affects and threatens economic and human development. It risks undermining efforts towards sustainable development, including progress on ending poverty, everywhere and in all its forms. The links between climate change and poverty are recognised in global processes, including the Sustainable Development Goals and the Paris Agreement on climate change. But how far are these links recognised in the distribution of international public climate finance?

Key findings

We estimate that the total amount of international public climate finance flowing to developing countries in 2014 was US$48.9 billion. Increases in support from development finance institutions and in the proportion of official development assistance (ODA) targeted towards climate change suggests the links between climate change and poverty are recognised.

But links between climate and poverty are not reflected in the allocations of climate finance:

Just under half of the global population living in extreme poverty is located in countries vulnerable to climate change. Despite this, allocations of adaptation finance do not prioritise the countries most vulnerable to its impacts: in 2014 total adaptation approvals were greatest to the 49 countries with mid-range vulnerability scores. Some of the most vulnerable countries such as Eritrea, Guinea-Bissau, Sierra Leone and Liberia received particularly little.

The 14 countries with the deepest levels of poverty (over 20%) received among the lowest amounts of total adaptation finance – a 2014 average of US$56 million per country, compared with an average of US$73 million in 67 countries with poverty depths of less than 5%. Support was especially low to Micronesia, Lesotho and Togo.

Countries with the highest vulnerability to climate change and the lowest domestic revenues to build capacity to respond receive some of the smallest amounts of adaptation finance.

While mitigation finance is distributed fairly proportionately against patterns of greenhouse gas emissions, support is lacking to a number of countries with significant mitigation needs and relatively few domestic resources, including the Democratic Republic of the Congo and Nigeria, which are also home to high populations of extremely poor people.

The report highlights that the limited adaptation resources available are not being distributed where needs are greatest. It argues that such assessments should inform future decisions on allocating of climate finance and other resources, particularly ODA. It also asserts that, while mitigation finance does not have a mandate to target people in poverty, it is vital that mitigation strategies are developed with an acute awareness of their impact on poor populations.

Lastly, the report calls for better data on both resources provided and their impacts, and the distribution of poverty and vulnerability. This would aid better understanding of the comparative advantages of the multitude of climate finance mechanisms and programming. Greater visibility on all climate finance is also needed to better inform tracking efforts, and hold donors’ existing and future financing commitments to account.